Quick! Take a Picture!

The digital camera has gone from elite professional tool to ubiquitous consumer gadget in a flash, and the peaking market is likely to get more competitive

Click, click, click. The sound of a camera snapping photos used to mean it would soon be time to take a roll of film to be developed. But not anymore. Digital technology has swept through the photography business in recent years, and the revolution now appears to be pretty much complete.

Cutting edge has given way to commoditization. Like all electronics that have come before, including computers, radios, and pretty much anything else that has a chip in it, digital cameras have become ever more powerful at the same time they have become smaller and more convenient to use.

Demand Is Slowing

Now the revolution is coming to a close. Market research firm IDC says that demand for digital cameras is slowing and that the market is entering a new phase of maturity. Global shipments, the firm says, grew only 15% in 2006, down from 20% in recent years, and are expected to grow only 8% this year. Consumers worldwide snapped up nearly 106 million digital cameras in 2006.

Moreover, the market will peak in 2010, IDC says. The notion that the market will top out so soon seems odd when you consider that it was only a few years ago that digital cameras began to outsell traditional film cameras, causing companies like Kodak (EK), Nikon, and others to dramatically overhaul their businesses (see BusinessWeek.com, 3/19/07, "A Nikon Pick for the Camera Shy"). Meanwhile, cameras integrated into mobile phones continue to get more sophisticated all the time, causing a market disruption of their own.

Simplicity, size, and price have gone a long way toward saturating the market, and that means the market is about to get a lot more competitive, as vendors scrap over features and price (see BusinessWeek.com, 4/2/07, "The Lumix DMC-LX2: Wide-Screen Wonder" and 4/11/07, "Pentax Optio M30: Light and Lively").

Time to Go Shopping

If the crop of cameras in our latest series of reviews is any indicator, then the coming market scrum will be wonderful for consumers. All of them help make a great picture fairly easy, even for the worst photographers among us (see BusinessWeek.com, 3/27/07, "The FinePix F31fd Makes Pictures a Snap"). All of them boast features like face recognition and shake control, but at prices that are consumer-friendly.

Consider Sony's (SNE) latest $400 Cybershot model (see BusinessWeek.com, 4/27/07, "Sony's Picture-Perfect Cybershot"), which takes a 12.1-megapixel picture, the best of those surveyed. Like the computer on your desk, such a sophisticated piece of technology used to cost thousands—and is now almost an impulse purchase. So goes the pace of change.

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